Back in the days of heady stock prices and endless launch parties, a group of hotshot dot-com executives had a dream.

Maybe, just maybe, Al Gore and the Democrats would win the White House and
Congress.

Reveling in the promise of newfound wealth, the group, which included
former Red Gorilla executives John Witchel and Wade Randlett and Excite@Home
founder Joe Kraus, set out to make their mark on the world of politics.
They formed Pac.com, a political action committee that planned to collect
money and stock from flush dot-commers and divvy it out to candidates who
supported a Democratic, tech-friendly vision.

Two weeks ago, the lobbying group finally won approval from the Federal
Election Commission, paving the way for Pac.com to accept stock donations
to be put into a pool, cashed in, and doled out to politicians. The novel
approach could position the group as a major fund-raiser--that is, if the
economy ever takes off again. At the least, it shows the growing interest among a new generation of tech executives in jumping into the
political fray, rather than leaving it to the folks inside the beltway.

"I think you're going to see more of that happening in years to come," said
Simon Rosenberg, president of the New Democrat Network. "There's a lot of
new wealth in the Valley despite all the problems."

Pac.com's FEC approval comes as campaign-finance reform has become a hot topic in Congress. On Monday, the Senate passed a bill that would ban soft-money contributions, which are the unlimited donations individuals can make to political parties for "party building" activities, and which are supposedly unrelated to specific elections. The House is considering the issue, but the bill shouldn't affect the lobbying group because it doesn't accept those types of contributions.

Shortly after Pac.com's formation last summer, The New York Times
Magazine ran a cover story about the lobbying group, featuring a
GQ-like photo spread of the Silicon Valley's young bucks, poised to parlay
their riches into political influence.

"We already drive every significant sector of the economy," Witchel told
the Times in the August 13 story. "The keys to the kingdom are
squarely in our hands."

But fast forward to 2001, and it looks like someone has changed the locks.
Things these days aren't quite so rosy for the dot-commers turned wanna-be
politicos. Red Gorilla has crashed and burned, the stocks of
many Internet companies have plummeted into penny territory, and George W.
Bush and a Republican Congress are holding the country's reins.

More like Pac.com coming
That doesn't mean the PAC is down and out.

"It may not be as sexy as it was a year ago," Rosenberg said. "But Pac.com
is a good idea. I think you'll see other efforts like this around the
country."

The group did suffer one setback while trying to clear regulatory hurdles.
The FEC rejected Pac.com's plan to give stock directly to politicians--a
move critics worried was designed to get around campaign finance laws.

"Instead, Pac.com must sell the stock and deposit the proceeds into
committee depository accounts--and then it may contribute the funds to the
authorized or other political committees," the FEC wrote in its ruling.

Rosenberg said the decision is not too big of a blow for Pac.com. "Some
candidates wouldn't have accepted it anyway," Rosenberg said, because of
the appearance they were in the pocket of the companies in which they owned
shares.

The nixing of the stock donations was the result of long rounds of
negotiations between Pac.com and the FEC, according to Randlett, one of the
founders of the lobbying group.

Watchdog groups bark
"I don't see anything wrong with it," he said. "But it was more of a
comfort level thing. They said, 'We're not comfortable with this,' so we
said 'OK.'"

But even the acceptance of stock donations into Pac.com has raised some
eyebrows among campaign-finance watchdog groups.

"My concern anytime you see something like this is to make sure it's not a
way to get prohibitive or excessive contributions to a candidate," said
Larry Noble, executive director of the Center for Responsive Politics and
former general counsel of the FEC. "It's something that has to be watched."

Donations in the form of stock have the potential to infuse much more money
into Pac.com's coffers than a simple cash contribution. For example, a
$1,000 stock donation, especially in a pre-IPO venture, could grow
exponentially if the company takes off. Under FEC guidelines, that
donation is valued on the day it's accepted, meaning it's still only
recorded as $1,000, even if the stock increases tenfold by the time it's
cashed out.

That phenomenon could put Pac.com on the radar screens of many politicians
looking to mine the Silicon Valley for campaign contributions. But, as tech
workers found out the hard way during the past year, the stock contribution
also could crumble to just a fraction of its value from the time it's donated.

"Pac.com has some of the same traits other dot-coms do," Noble said. "It
may fluctuate wildly."

So far, Pac.com's members have been donating $1,000 to politicians who come
to their roundtable discussions. In the coming months, they plan to focus
mainly on the 2002 Senate races by picking a handful of tech-friendly
Democratic challengers and incumbents with a good chance of winning. The
group is focusing on the Senate because it sees that as the best forum for
Democrats to tip the scales in their favor.

What's your policy?
Pac.com's policy ambitions are somewhat vague. "Our goal in life is to
support pro-technology, moderate democrats," Randlett says when trying to
sum up the group's point of view.

The No. 1 focus of the group--no surprise here--is the economy. Pac.com
members don't necessarily support cutting taxes. Instead, they'd like to
see the capital markets stabilized, which would open another window for the
initial public offerings that created much of their members' wealth last
time around. In addition, the group would like to see an overturning of the
Alternative Minimum Tax, a
convoluted tax scheme that requires people to pay taxes on money they never
actually earned and has put many a dot-commer into severe debt. They also
embrace a liberal social agenda while being pro-business.

But some Washington insiders say groups such as Pac.com must focus on single
issues. For example, the group's claim that it's a supporter of moderate,
pro-technology candidates prompted this response from a Washington-based
tech trade group representative: "Who isn't?"

Still, Pac.com is one of just a handful of tech-focused political efforts
with roots in the Valley instead of Washington. And it could be a harbinger
of the young tech executive's influence on politics. Already, former
RealNetworks executive Maria Cantwell, D-Wash., has won a Senate seat after
using some dot-com riches to finance her campaign. Derek Smith, founder of
iEngineer.com, defeated an incumbent to win the Republican nomination for a
Utah seat in the House during the last election (though he eventually lost
to Democrat Jim Matheson). And Steve Westly, a former eBay vice president,
is waging a race for California's Controller in the 2002 election.